Mike O'Brien: I hesitate slightly before I answer, as the last time that I responded to Solicitor-General's questions—the first time that had done so, in fact—I had to apologise to the House for the CPS' failure to refer what had happened in a homicide case to a victim's family. The CPS does not always carry out its duty as efficiently as we would prefer, but the procedures exist and are implemented in the vast majority of cases. The CPS' obligations are much more at the forefront of its staff's minds than they ever have been in the past. There has been a remarkable transformation in the CPS, which now acknowledges its responsibility to do justice and to ensure, along with the police, that victims and their families, and witnesses, are informed of what is happening in court cases. Things are changing, and I hope that the local CPS of my hon. and learned Friend the Member for Redcar (Vera Baird) will be at the forefront of that change.

David Winnick: Will my right hon. Friend comment on the proposed industrial action by cleaners employed by outside contractors, which is, I understand, due to take place next Wednesday? Can the Government use their good offices to try to ensure that people employed by contractors have the same conditions as those directly employed by the House, so that we do not have cleaners who are paid only £5 an hour, with no sickness pay and no pension? That is deplorable. We would not stand for it in our constituencies; we would make our protest, and we should do so here. As for the so-called rest rooms, I visited them only the other day. They are slums on our own doorstep. When we consider our accommodation for Members or Officers, why should our fellow citizens have as rest rooms places that Dickens would have recognized in his time? This is totally unacceptable. We must treat those who clean up after us properly and that includes those who are employed by contractors. Why have contractors in the first place?

Hugh Bayley: The hot weather, unseasonable flash flooding in north Yorkshire and the increased severity of winter flooding all show that climate change is a real problem, and I congratulate the Government on making it one of their G8 priorities. Will the Leader of the House find Government time to debate the achievements at the G8 and what still needs to be done to combat climate change?
	The House observed a two-minute silence.

Gerry Sutcliffe: I am delighted with the quality of our debate on new clause 1, but as Members have said, in discussing it we have to consider the wider context of the Bill, on which there is considerable consensus within the industry, among consumer groups and in all parts of this House. Interestingly, new clause 1 is a joint arrangement between the Conservatives and the Liberal Democrats—a new pact is emerging. That said, I thank the hon. Members for North Norfolk (Norman Lamb) and for Wealden (Charles Hendry) for tabling the new clause, the spirit of which I genuinely accept.
	The new clause raises a very important issue that was been debated in the House and by the Treasury Select Committee, of which the hon. Member for North Norfolk was a member. The Government believe that data sharing is a necessary and important means of ensuring responsible lending, but the issues are wider than just those covered by the Consumer Credit Act 1974. They include other types of lending regulated in other statutes, such as the Financial Services and Markets Act 2000, and the important question of data protection, which is regulated by the Data Protection Act 1998. Members of the Association for Payment Clearing Services agreed data sharing principles in 2004 and, among other things, they committed to sharing all data that they are legally able to share.
	The Department of Trade and Industry is discussing measures to improve current levels of data sharing with the credit industry, so we are taking the lead that Members have asked us to take. Such measures include working with the credit industry to determine the case for possible legal changes that would allow the sharing of data on accounts dating back to before lenders routinely sought permission to disclose data for credit reference purposes.

Norman Lamb: I have spoken with Which?, but I cannot, in all honesty, rattle off a list of consumer organisations that endorsed the particular wording. I have carefully considered it and, for what it is worth, I am lawyer—[Interruption.] I understand that that causes a problem for the Minister. I believe that the provision is proportionate and that it is right to put it to the vote.

The House divided: Ayes 106, Noes 234.

Charles Hendry: I am grateful to the Minister, especially for meeting the hon. Member for North Norfolk and me last week to talk about the issue of arrears notices. I am pleased that we have been able to agree on Government amendment No. 7 to help to resolve the problems that would have arisen from the Bill's original wording, to which the hon. Gentleman and I drew attention in Committee. That shows how far we can go when the Minister genuinely understands where we are coming from.
	The amendment addresses a significant difficulty. In the Bill's original format, there is no distinction between cases in which four payments have been missed in a short period of time, where the borrower is likely to be in arrears, and possibly in some distinct trouble, and cases in which four payments have been missed sporadically, over a much longer period of time. In the latter case, missed payments are likely to have been repaid and amicable arrangements may have been made with the lender. If the Bill does not draw that distinction, lenders will be forced to issue arrears notices to borrowers who, in the latter case, may not be in arrears at all.
	The problem is an aggregate one that relates most closely to home credit loans repaid on a weekly basis, where missed payments are not uncommon for most customers during their loan agreement. Indeed, on average, most home credit borrowers miss four payments during the period of a loan. A customer on a one-year agreement might miss one payment at Christmas, because of the increased costs at that time of year; a second in the spring because of a child's birthday; a third in the summer simply because they are on holiday the week the collector visited; and a fourth in the autumn for an entirely different reason. On all occasions, they may have notified the credit company and agreed amicably to repay the missed payments at a subsequent point. However, as drafted, the Bill would require the lender to issue an arrears notice on the missing of that fourth payment, despite the fact that the customer was not in arrears.
	As the Minister said in Committee, the customer would not technically be in arrears. In such circumstances, an arrears notice would cause great stress and concern. It would lead to family tension, as the borrower would be forced to explain why they had been issued with an arrears notice, however user friendly the format of that notice might be, when they would contend they are not in arrears because no additional debts or charges had been incurred.
	The requirement would also create a bureaucratic nightmare, as potentially every one of the 3 million home credit borrowers would need to be issued with an arrears notice. That also presents a major administrative burden. Assuming that the cost of writing, posting and administration is just £1 a letter, that represents an extra £3 million in administrative costs, which would inevitably be passed on to borrowers in the form of higher charges, and that is the opposite of what the Bill seeks to achieve.
	By reducing the time-frame in which the four payments must be missed before an arrears notice is required to be issued, from the entire length of the agreement to 20 weeks, we can overcome many of those difficulties. I am particularly pleased that the Minister has responded to our request that the period should be 20 weeks rather than the 26 weeks that he initially proposed. I am grateful for his flexibility. A 20-week period will be far more indicative of a customer in trouble, and will help to reduce the unnecessary distress and bureaucracy caused by issuing incorrect notices. Perhaps raising the number of payments missed from four to six would have helped that further, but I nevertheless welcome the Minister's compromise.
	I tabled amendment No. 4 to the Bill before I was aware of the exact wording of the Government's amendment, but it remains relevant. I hope that the Minister will not think me churlish after his generosity if I seek to push him one step further. The aim of amendment No. 4 is to ensure that arrears notices will need to be served to customers only if their interests are prejudiced, and that means that they have incurred a charge or penalty on their account. The hon. Member for North Norfolk made that point especially strongly in Committee and it is fundamental to what we seek to achieve.
	It looks possible that section 9A of the Government's amendment, which states that
	"only amounts resulting from failures by the debtor or hirer to make payments he is required to have made during that period shall be taken into account in determining any shortfall",
	addresses that same issue. My hon. Friend the Member for Lichfield (Michael Fabricant) mentioned the need for plain English, and I cannot quite understand the exact meaning of the provision. I would be grateful if the Minister clarified the implication of the amendment in that respect.
	I think that the Minister understands why this issue is so important. We totally agree that arrears notices should be issued where a person is genuinely in growing arrears, but we do not think it right that it should be issued if they may technically be in arrears, but that has no other implication for the borrower. To give an example, if I lend the Minister £100—I know that that is highly implausible—to put on the horses this afternoon, he might offer to pay it back in 10 weekly instalments of £10. Of course, as a generous person I would not charge him any interest. If he tells me that he wants to treat Mrs. Sutcliffe to a special night out—we know that he can get a good deal up in Yorkshire—and to miss a couple of payments and so pays it back over 12 weeks instead, he would technically be in arrears, but neither of us would believe that to be the case in reality. It would be a reassignment, with no further debt or charge involved. The same is true in most home credit agreements, so the further change—

Gerry Sutcliffe: We must be careful about the principle involved. The first sign of people having debt problems is that they miss payments. That is why we tabled amendment No. 7. It is a dangerous to allow people to miss payments. I feel strongly about that and I hope the hon. Gentleman will withdraw his amendment. It is dangerous and risky.
	There is some confusion about whether amendment No. 4 relates to clause 9. It relates to clause 10, which deals with running-account credit. There is no difference between default and arrears. They are both breaches of the agreement. I hope the hon. Member for Wealden will reflect on what I and the hon. Member for North Norfolk have said. The amendment may relieve the bureaucratic burden on business but it is dangerous. I hope the hon. Member for Wealden will withdraw it.
	Amendment agreed to.

Charles Hendry: Clause 19 is undoubtedly one of the central components of the Bill. As I have said, it determines the thrust of what we are all trying to achieve—a better, fairer and more responsive system for consumers. Opposition and Government Members have discussed the new unfair relationships test during the Bill's progress through the House, and we all favour that provision, because it replaces the out-of-date "extortionate test", which has failed to offer consumers adequate protection in a market that has changed beyond all recognition in the past 30 years.
	The current imbalance, which does not serve consumers' interests, must be addressed, and the new unfairness test is central to achieving that objective. Extensive debate took place in Committee about the nature of the test, and we continue to have serious reservations about the concept of "guilty until proven innocent", which is alien to British law.
	We received representations from both sides of the issue in Committee. Lloyds TSB stated:
	"The Bill introduces a new unfair credit relationship test, which means consumers can challenge unfair practices and terms in court. However, the meaning of 'unfair relationship' is vague and the scope of the provision is generally too wide for both consumers and creditors . . . The Bill contains no guidance for consumers as to what constitutes 'fair' or 'unfair' to enable them to identify when they have a valid claim. Similarly, there is no guidance for creditors on how they should conduct themselves to ensure that their actions are not 'unfair'. Unlike comparable legislation in respect of unfair contract terms or financial regulation, there is not even a non-exhaustive list of relevant factors."
	From the other side of the debate, a charity, Credit Action, stated:
	"The presumption that all relations are 'unfair' unless proved otherwise is in itself unfair, excessive and contrary to normal British law."
	We also received representations from the Finance and Leasing Association:
	"We reiterate our support for the principles behind the Consumer Credit Bill. However, the combination of the lack of information regarding the unfairness test and the retrospective nature of the test hugely increases uncertainty within industry and could impact critically on the UK's £235 billion per year securitisation market. This market has to date been a very important source of capital for many lenders. Industry is concerned that the Government have not taken account of the potential for the market to be disrupted by retrospective application of the unfairness test. Market risks may ultimately have to be revised, thereby having an adverse impact on the credit ratings of securitisation transactions. This could increase securitisation costs and ultimately have a negative impact on competition and cost in the consumer credit market."
	Both borrowers and lenders the support the idea that the situation should be clarified, but we will watch the shift to the unfairness test with the greatest care. That concept already exists in employment law—an employer is assumed to have acted in a discriminatory manner unless he can prove that he has not—but we are wary of spreading it elsewhere.
	The focus of amendment No. 5 is that the unfairness test cannot achieve its desired effect unless the present lack of definition about what would be considered "fair" or "unfair" is cleared up. The Bill offers no guidance to consumers or the credit industry on the practices that will fall within or outside the boundaries of that test. Indeed, we do not know where those boundaries lie, which is why both the consumer organisations and the credit companies have asked for greater clarity.
	The lack of clarity presents problems on both sides. Consumers, without a thorough understanding of their chances of success through the courts, will be deterred from pursuing cases that, if unsuccessful, could only add to their financial difficulties, stress and problems. On Second Reading and in Committee, we heard about how concerned people are about taking such matters to court. They are often people of very limited financial means and, even if they are supported by outside organisations or on legal aid, they are terrified about taking on a multi-billion-pound corporation in the courts.
	The credit industry, without a thorough understanding of what lending practices will be considered inappropriate, will remain unaware of the changes that it might need to make to ensure that its consumers are protected. As a consequence, lenders will be forced to become more cautious in their lending, achieving exactly the result that the Government least want. Those at the margins will be driven to the least scrupulous lenders, to the loan sharks or to the lenders charging the higher rates of interest.
	The approach to tackling unfairness in lending must be targeted and consistent. Lenders need certainty from the outset that their contracts are secure and customers with genuine cases need to be clear about where they stand. My amendment aims to reach that level of clarity. It would allow the Office of Fair Trading, under its extended remit as provided for under the Bill, to issue guidance on those circumstances and activities that would be deemed unfair, subject to approval by the Secretary of State. By issuing such guidance, the level playing field that we all want restored will be that much more achievable. The Minister may argue that such guidance is not necessary or that it will somehow act as a constraint, but that argument simply does not hold true, because there are already legislative precedents that show how feasible and effective such guidance can be. The Unfair Contract Terms Act 1997 and the Unfair Terms in Consumer Contract Regulations 1999 demonstrate that it is possible to give sufficient guidance to consumers and creditors by means of a non-exhaustive list of the factors that are relevant to an assessment of fairness.
	I draw the House's attention to annexe 1 of the directive on unfair commercial practices, which contains an extensive list of commercial circumstances or practices that are considered unfair in all circumstances. It says that misleading commercial practices include:
	"Claiming to be a signatory to a code of conduct when the trader is not . . . Claiming that a code of conduct has an endorsement from a public or other body which it does not have . . . Falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice . . . Establishing, operating or promoting a pyramid promotional scheme where a customer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products . . . Passing on materially inaccurate information on market conditions or on the possibility of finding the product with the intention of inducing the consumer to acquire the product at conditions less favourable than normal market conditions"
	and
	"Conducting personal visits to the consumer's home ignoring the consumer's request to leave or not to return except in circumstances and to the extent justified, under national law, to enforce a contractual obligation."
	All hon. Members would endorse those as activities that would be unfair in all circumstances. There is therefore no good reason why a clear standard could not also have been applied to the Bill.
	I also draw hon. Members' attention to the OFT guidance that was issued to all Standing Committee members by the Minister prior to the proceedings, in which the OFT was able to indicate examples illustrative of scenarios where it would consider imposition to be a requirement on licensees. If the OFT is capable of offering these examples, that clearly demonstrates that it is also capable of issuing guidance and examples relating to unfairness. That is a perfectly logical and sensible follow-on, and it is what the amendment calls for.
	Unclear and ill-defined legal frameworks do not represent good law making and, in this case, do not represent positive steps towards offering better protection for consumers. We should realise from the precedents that the opportunity is there for us to give the Bill more authority and certainty. I firmly believe that we should seize that opportunity.
	Amendment No. 3 aims to ensure greater certainty about what is meant by unfair relationships. Further to amendment No. 5, it requires the Office of Fair Trading to publish guidance on the scope of the unfairness test before the provisions on unfair relationships come into force. It would be unfair and inappropriate if the test were introduced before the advice and information was published.
	The new provisions will clearly have a major impact on the way in which credit companies operate but they are not clear about the extent to which those companies may need to change their practices to conform with the Bill's requirements until they have the information. As we know from the Consumer Credit Act 1974, such changes can take a considerable time to implement. It is therefore right and proper that companies receive as much notice as possible. Any mistakes caused by unnecessary hurrying will impact negatively on the consumer.
	Let me deal with amendment No. 6 on retrospection. Hon. Members know that the new unfairness test will apply retrospectively to any credit agreement that continues beyond the transitional period, which is set at one year from the date of the commencement of clause 20. Although I do not believe that applying law retrospectively is normally appropriate—indeed, it often represents bad law making—it is necessary in the circumstances that we are considering.
	Many credit agreements run for a considerable length of time. Without a retrospective dimension to the Bill, too many people will be left uncovered by the protection that it offers. Given the extent to which the credit industry has changed in the 30 years since the 1974 Act, that would be unacceptable.
	Nevertheless, I am worried that the Bill will create substantial unnecessary bureaucracy in relation to retrospection because of the number of shorter-term agreements that could caught in its grasp. For example, an existing credit arrangement that is due to finish a few months beyond the transitional period will be subject to the provisions of the measure because of those few months. The cost, administration and time expended by lenders on adapting their processes to meet the changes will be significant. As we all know, those charges will be passed on to consumers in higher interest rates or additional charges. The amendment therefore excludes those agreements that will expire in two years after the transitional period. I am not wedded to the two-year period and would be willing to consider a shorter time if that would make it easier for the Under-Secretary to accept the principle of the amendment and if he undertook to table a Government amendment in another place. However, the principle is sound. The new rules and regulations would come into force, as currently planned, for agreements that last longer than two years after the one-year transitional period at the end of that transitional period. We should try to keep bureaucracy to a minimum for agreements with only a short time to run. It will ease the transition process for lenders and consequently help to alleviate the risks of consumers bearing extra costs.
	The amendments therefore emphasise a desire for greater clarity in the Bill. The Under-Secretary has resisted accepting such proposals throughout our proceedings and I suspect that he will do so again, but I hope that, on reflection, having heard the argument once more, he will be prepared to budge.

Gerry Sutcliffe: I am trying to resist the temptation to get involved in a discussion about unfairness. The hon. Gentleman must consider this issue in the context of the Bill and of the other measures that appear alongside the unfairness test. The whole purpose of the Bill is to provide for transparency and responsible lending. I shall resist going into detail about the unfairness test, because I know that I am not going to convince the hon. Gentleman or the hon. Member for Wealden of its appropriateness, but I ask him to consider the matter in the context of the Bill.

Charles Hendry: I have been delighted to have the chance to lead for the Opposition on such an important Bill, which will help to bring consumer protection in the UK up to speed with the considerable changes that have taken place in the credit industry in the 30 years since the introduction of the Consumer Credit Act 1974.
	The extent to which things have changed in terms of the size of the industry, the range of products on offer and the level of indebtedness among consumers shows how outdated that legislation has become and how imperative it is that new measures are introduced to respond to the situation. From the outset, we have made it clear that the Conservatives give the Bill broad support in achieving that goal and we are fully committed to action to root out loan sharks and bad practice, especially as it is the most vulnerable who are usually the hardest hit.
	We have raised concerns and probed the Minister on a number of issues and problems along the way. That was part of the process of ensuring that we get things right this time and that the Bill can cope with the demands that will be placed on it by future changes in the credit industry. Had the Minister been prepared to say "yes" a few more times, the Bill would have been even better, but we shall leave that to our friends in another place.
	I pay tribute to Members on both sides of the House for their expertise and for their determination to look after the interests of people preyed on by those who seek to exploit their financial circumstances and their lack of understanding of sharp lending practices. An understanding of the issues and the passion to drive them forward is a good combination and we have been lucky that Members have demonstrated that.
	Many Members referred to tragic cases where individuals were caught up in a vicious cycle of worsening debt, often caused by unscrupulous lenders and unfair practices. That was an important part of our considerations and it is those lenders and practices that the Bill seeks to stamp out. At the same time, it is important that the Bill does not stifle the ability to operate of credit businesses that behave responsibly and whose services are often of great benefit to individuals and families, especially those on low incomes. We recognise that the overwhelming majority of credit providers act responsibly and the legislation, although it will inevitably affect them, is not targeted at them.
	As the Minister said at the outset, debt of itself is not bad; it is irresponsible lending that causes the problem. By far one of the most important aspects of the Bill has been the new unfair relationship test, which replaces the old, impractical, extortionate credit test. We support the new test as a means of clamping down on loan sharks and unfair practices but, as the Minister is well aware, we are concerned about the lack of detail. As he knows, we have argued powerfully for that greater detail and we are disappointed that he has not given ground on it. Many of us believe that the Bill will be of less benefit to consumers as a result. It should be Parliament that gives the detail, not the courts, with all the time and huge costs that that will involve. It means that lawyers will benefit rather than borrowers.
	Many still do not think that the Bill goes far enough. Even the Daily Mirror quoted just this week the chief executive of the Nationwide building society, who said:
	"It is a great shame the opportunity was missed at the Committee stage to improve the Bill. While we support the broad thrust of the Bill, we still don't believe it goes far enough. We strongly urge MPs to grasp this last opportunity to make a real difference to consumers. Some practices, like credit card providers applying payments to the cheapest debt first, remain unfair and can only be to the detriment of the consumer. Any debt counsellor worth their salt would tell you to pay off your most expensive debt first."
	There have been areas where we have tried to make those changes and I am disappointed that we did not succeed in persuading the Government to agree to them.
	We also welcome the new systems of redress provided through the Financial Ombudsman Service. The Bill also provides expanded powers for the OFT as a means of improving regulation. Again, we agree that better regulation of licensees is a crucial step forward, but we remain concerned that the OFT's powers will go unchecked and that it will be judge and jury. We would like to see more control retained by Government and Parliament over its actions.
	Another crucial dimension of the Bill is the increased level of information provided to consumers concerning their credit agreements. That, too, is an important step forward towards tipping the balance of power back towards consumers. They need to be granted an equal standing and to have access to appropriate information to make informed choices over their credit decisions. It is also a vital means of helping consumers avoid getting into trouble with their agreements. I am pleased that the Minister has been working with us to ensure success in this respect.
	I join with the Minister in paying tribute to our two Chairmen, the hon. Member for North-West Leicestershire (David Taylor) and my hon. Friend the Member for Old Bexley and Sidcup (Derek Conway), for the way in which they kept us in order during debates. I pay tribute to hon. Members on both sides of the House who have spoken with such passion and commitment on what is an important area for many of our constituents. In particular I pay tribute to my hon. Friends the Members for Hemel Hempstead (Mike Penning), for Wantage (Mr. Vaizey) and for Hornchurch (James Brokenshire), who as new Members have shown tremendous commitment, understanding and expertise. I do not restrict my comments to Conservative Members. This has been an extremely valuable process on all sides, with many years of expertise brought to bear.
	We have had a wide-ranging debate. We have focused in particular on issues, such as loan sharks, but we have also discussed a helicopter clause, so that when the Prime Minister's friends need to buy a new helicopter or yacht at short notice, they can be given greater assistance in doing so. We have made progress on those issues. Naturally, I pay tribute to the Minister who has been courteous and charming throughout. He is the natural heir to General de Gaulle and Mrs. Thatcher in being able to say no so forcefully and so often, but I wonder whether perhaps he should move in his next life to the Department for Transport because his sense of direction is remarkable. He always knows where we are coming from and understands where we are heading in every contribution. As I said earlier, it is just a shame he would not help us get there.
	I thank the officials at the DTI and in the House. Departmental officials must have dreaded yet another list of Hendry questions. No doubt forests were torn down, gallons of ink were expended and writers' cramp inflicted simply to give the Minister the answer as quickly as possible. They have been extraordinarily helpful, too, in providing written replies subsequently. I was particularly struck by the one about my challenge to the Minister to find some fees which had gone down under this Government. They produced an extensive list of Companies House charges. However, I win on points. The Directors Register by e-mail has indeed gone down from £3 to £2.50 but things like the full snapshot of the Directors Register has increased from £60,000 to £120,000. The list shows that the general drive is upward, even if there are some examples of fees that have come down. In any case, the officials have provided a great service, both in Committee and subsequently.
	The Minister has made a tremendous effort to bring the Bill back to the House so quickly, and we all pay tribute to him for doing so. He should be praised for that, and for consistently dealing with our amendments with great courtesy and good humour. I am pleased with the level of consensus that we have struck throughout the Bill's progress and, although we have not always been able to agree on the detail, we all want to see the same end product—more protection for consumers, better systems of redress, more access to information and better regulation.
	I regret that the Government rejected our proposals on matters such as credit card checks and controlling unsolicited increases in credit limits. I sense that most hon. Members supported us and we will look back and regret that we were not more effective. I am also disappointed that some issues were ruled out by the Chair— although of course we respect that judgment—such as the amendment on the standardisation of interest rate calculations, which is a matter of tremendous importance.
	I remain concerned by the complacency about the growing level of debt that we face in this country. The Minister was able to point to the rising value of property and the huge bedrock of capital that supports that debt, but we are seeing a worrying growth in credit card arrears, bad debts, mortgage repossessions and bankruptcies. We need be aware that the problem could be getting worse.
	We have, however, gone a substantial way to reaching the aims that we set out to achieve and we all look forward to monitoring the Bill's progress. To end on a conciliatory note, I congratulate the Minister once again on his personal commitment to ensuring that the Bill becomes law.